Preliminary Draft – Comments Welcome. Wall Street’s First Corporate Governance Crisis: The Conspiracy Trials of 1826

scandalous revelations of fraudulent financial practices by their management. The directors of many of these companies, mostly insurance firms, were indicted by the District Attorney of New York for criminal conspiracy, and their subsequent trials captivated the attention of the city for months. These events represented a watershed in the early development of the corporation laws and investor protections governing Wall Street: in the aftermath of the scandals, New York State enacted an extensive package of legislation designed to protect the interests of investors. This paper analyzes the fraudulent practices of the firms that failed, and the evolution of the law in response. The analysis highlights the critical role played by scandal-driven legislation in developing effective investor protections, and improving the governance institutions of corporations. ∗Email